Sector News

Borealis turns down EuroChem offer for fertilizer business, citing Ukraine invasion, sanctions

March 13, 2022
Chemical Value Chain

Borealis (Vienna, Austria) has declined EuroChem’s (Zug, Switzerland) €455-million ($500 million) binding offer to acquire its nitrogen business, citing the war in Ukraine and EU sanctions. Russian businessman Andrey Melnichenko, who owns a 90% stake in EuroСhem, was placed on the EU’s sanctions list on Wednesday in response to Russia’s invasion of Ukraine.

“We have closely assessed the most recent developments around the war in the Ukraine and sanctions that have been put in place,” says Thomas Gangl, CEO of Borealis. “As a consequence, we have decided to decline EuroChem’s offer for the acquisition of Borealis’ nitrogen business, including fertilizer, melamine, and technical nitrogen products,” he says.

Borealis says it will “consider various options” regarding the future of the nitrogen business.

EuroChem announced in a separate statement Thursday that Melnichenko has resigned his position as non-executive director, and has also withdrawn as main beneficiary, effective 9 March. EuroChem did not provide details on how Melnichenko’s stake would be restructured.

In February Borealis and fertilizer producer Eurochem entered into exclusive talks following a binding offer from Eurochem for the nitrogen business. The transaction was expected to close in the second half of the year. Borealis announced in February last year it had started a process aimed at divesting the nitrogen business unit.

Gangl told CW in February the sale of the fertilizer business was an “important next step … to go to a company that’s fully focused on the business.” The fourth quarter had been “an extremely good one in the nitrogen business because they adapted to the prices,” he said, referring to high gas prices at that time. He also described the proposed transaction value as “a fair price.”

The Borealis nitrogen business had sales volumes in 2020 of 3.9 million metric tons, including 800,000 metric tons of technical nitrogen solutions and 150,000 metric tons of melamine, with total 2020 revenue of €908 million.

The transaction would have seen EuroChem acquire five production facilities in Europe, as well as a full sales and distribution network. Borealis has three production plants in France, one in Austria, and one in Germany.

EuroChem has key manufacturing facilities in Russia, Belgium, Kazakhstan, and Lithuania, recently launching a project to build a 1.0-million metric tons/year (MMt/y) ammonia plant and 1.4-MMt/y urea plant at Kingisepp, Russia. EuroChem started up a 1.0-MMt/y ammonia plant at Kingisepp in mid-2019, and is also working on the first and second phases of its Usolskiy, Russia, potash mine.

By Mark Thomas


comments closed

Related News

January 29, 2023

Dow and 3M cut thousands of jobs

Chemical Value Chain

3M and Dow have announced they are cutting thousands of roles from their global workforces in response to economic pressures. Dow has said it will cut 2,000 jobs across its global workforce (around 5%) in a bid to save US$1bn in 2023. The company says it will also cut costs by shutting down “select assets”, though it did not note where it would halt operations.

January 29, 2023

Sweden discovers Europe’s largest rare earths deposit

Chemical Value Chain

Sweden’s state mining firm has discovered what could be Europe’s largest rare earths deposit, and says it could help the bloc reduce its reliance on imports of minerals needed to manufacture clean technologies and meet climate targets.

January 29, 2023

Avantium to supply Henkel with plant-based FDCA

Chemical Value Chain

Henkel and Avantium have been partners since 2019, when Henkel joined the PEFerence consortium. This consortium of partners, coordinated by Avantium, aims to establish an innovative supply chain for FDCA and PEF (polyethylene furanoate).

How can we help you?

We're easy to reach